Fiscal Planning and Management

"Today’s mayors are business managers, trying to make sure they squeeze every nickel out of their budgets to provide essential city services. In the last decade we’ve witnessed mayors who’ve taken on every issue. Today’s mayors are willing to undertake any issue that will improve the life of their cities. We don’t have the luxury of passing the buck."

Background

The Mayor is the Chief Executive Officer of one of the largest organizations in the community. As such, the mayor oversees $450 million of annual revenue, taxable assets of over $3.5 billion, employment of more than 6,000 people in City government and the Syracuse City School District, all with an obligation to provide services to the 147,000+ residents and 43,000 separate properties. Add to this over 280,000 calls responded to by the police department, more than 100 fire responses and 7,000 first-responder medical emergency calls by the fire department, and the complexity of the planning and management challenge takes shape.

Technology assists in this endeavor, but only to a point. The City’s financial management system is maintained on two IBM mini-computers, state-of-the-art AS/400’s. The general ledger, budgeting, and accounts payable applications run on a remote system under a contract with Affiliated Computer Systems, Inc. (ACS), with their proprietary software. Payroll, property tax, water billing and code enforcement applications are maintained on the AS/400’s with software developed by City staff. An AS/400 also runs the District’s financial management system with software originally licensed from IBM, and currently maintained by District programming staff. And, finally, the student record system is established on a Hewlitt-Packard mini-computer. Yet, all of this technology as a management tool is only as efficient as the people who use it for quality data analysis and benchmarking. As a fiscal tool, it is only as good as the dynamic software system that is utilized.

The next Mayor will also inherit the remaining six months of a budget adopted by the prior administration. Currently, there are many factors that affect, and will continue to affect, the combined budget of the City and the District. This means that the next Mayor must immediately understand the current budget status, the progress of any contract negotiations, and the impact of declining federal funding for Community Development Block Grant (CDBG) and the Syracuse Housing Authority. The mayor must also understand the economic impact of new construction, the deterioration of city vehicles, the continual decline in the student population, and the lack of confidence held by the rating agencies. All of this must be acknowledged, understood and confronted as the preparation of the new budget commences.

Problem Identification

A clear understanding of the financial challenges facing the Mayor on January 1, 2002, is essential for establishing a fiscal plan. Keys to this understanding are a grasp of the current structural budget deficit, an awareness that the City needs a multi-year financial plan, a commitment to fiscal discipline and an appreciation of the importance of the City’s credit rating.

The current budget deficit is not just a one-time problem. It has been, and will continue to be, an annual problem, until the structural variables that create it are controlled. The variables are the shrinking tax base and the expanding financial needs. As the City goes through a period of stress, costs go up. The relationship of the variables is critical. In rounded numbers, payroll amounts to over $100 million annually. The property tax generates $20 million. So a 2% increase in payroll requires a 10% increase in property taxes. The tables below show the relationship of all revenue and expenditure categories for 1999/2000.

The control that is necessary to manage the structural deficit has been lacking in the financial management policy of the Bernardi administration. That policy has accepted the historical growth of this deficit, instead of building a firm understanding of how to restructure the budget to deal with it. Each year, the City falls deeper into a financial pit. The City is relying on increases in State aid and deficit spending in order to keep services functioning. Services are cut to make ends meet, and the result is a downward spiral.

Objectives

By understanding the problem of the current fiscal situation as described above, the Mayor will be able to define a policy and plan which achieves financial stability, not just in the near future, but in a sustainable fashion for the City for years to come. At the same time, changes in the management flow and structure of city government can bring much needed efficiency, prevent replication of tasks and provide for a more concerted effort in continually benchmarking and evaluating performance.

Methods of Achievement

In many ways, the City is facing what private-sector business faces every day. In the private sector, when customers complain about defective products, industry could either improve the inspection process to prevent defects from shipping or improve the production process to eliminate defects. For effectiveness and fiscal efficiency, they chose the latter.

The City faces the same dilemma when offering services as a product. For example, currently, police calls are escalating at a rate of 20% per year. Syracuse can either respond by increasing the number of police, or it can find out why there are so many calls – more than 280,000 from a population of 147,000, most of whom never call the police. By doing the latter, fiscal responsibility and management analysis allow for efficient and productive government. This analogy does not resolve all of the problems, but it does take fiscal planning and management to a coordinated higher level. Throwing dollars at a problem does not solve it, nor does isolating the issue within a budgetary framework. Multi-year budgeting involves all departments in a holistic analysis of issues, affords the implementation of a stronger and more efficient management structure, and provides the framework for effective and direct allocation of available resources.

In order to accomplish this more "business-like" approach to government, the Lewis Administration will address the following areas:

A three-year multi-year financial plan will be prepared and introduced with a program budgeting base.

The development of a three-year multi-year financial plan provides the core structure for fiscal and management improvement to take hold and bring to the City a progressive sense of policy evolution and implementation. In the short-term, it is necessary that such a plan include the use of program budgeting and activity-based-costing in order to allow the administration to better utilize the resources available. The annual debt service can be reduced by extending the pay-off period. And specific changes to current policy need to be made: a Fund Balance Reserve Policy must be adopted; sales tax revenue estimates should be coordinated with the County; and a specific program should be implemented to re-establish the City's credit rating.

Program budgeting, which is state-of-the-art budget management, can be brought to the City. This can be introduced to the Common Council with the assistance of Syracuse University's Maxwell School. It can be implemented while an internal task force realigns the management structure along program lines. This requires the establishment of an outcome measurement structure which sets specific program goals and accountabilities, provides for an analysis and review process to make sure that the efficiency of each program is monitored and ensures that any adjustments made are done so with the proper information.

One management area that needs to be addressed is the deterioration of the City's vehicles. An assessment of the use and condition of these vehicles must be commissioned. With the results of the assessment, a long-range plan for the use of the fleets must be developed. This needs to include a preventive maintenance program, the exploration of the feasibility of a centralized routine maintenance facility and a "You Drive It Home With Pride" program for non-commercial vehicles.

The mayor's office needs to be realigned to better match program budgeting.

In the broad-scheme, when city government is redefined along program lines, the Mayor's office must also be realigned. As such, the administration will have singular liaison positions, focusing on the following areas:

• Education - The link between the District and the Mayor's office. Coordinating weekly meetings which deal with issues ranging from weekly attendance and transfers to capital project progress. There will also be the coordination of City and District public events so that conflicts can be alleviated for those in the community who wish to be active in both areas.
• Neighborhood Support - The link between the neighborhoods and the Mayor's office. Again, weekly events and attendance at public functions by members of the Mayor's administration and City departments will be coordinated to alleviate conflict, and provide much-needed public interaction. Community school effectiveness and coordination will also be a responsibility here.
• Economic Development - The link between groups such as FOCUS Greater Syracuse, the Chamber of Commerce, Syracuse University, the medical complexes, the Metropolitan Development Association, and others. I will promote local projects and facilitate City-County efforts that expand industrial and business development in the Downtown Neighborhood as well as in the other 25 neighborhoods of the City.
• Marketing - The link between the City and the potential market. The City needs to promote itself more effectively, not only to the outside but also to its citizens. A coordinator for marketing will be able to work with City departments, business and educational entities in the community, housing developers, the real estate community, and others to assess, promote, market, and develop long-term plans to broaden the tax-base of the City without a detrimental impact upon current stakeholders.

The Lewis Administration will realign the Mayor's office to achieve improved communication, control, and efficiency. Technology will provide timesaving and cost-saving methods of analysis for project planning and scheduling. The sharing of information will afford all City departments greater access to data that will assist in performing daily tasks. This will become most apparent as the Administration provides more frequent and more detailed reporting to the Common Council, the Board of Education, the investment community, and, most importantly, the general public.

The Mayor must find alternative funding sources.

While all of the program and service delivery changes will hopefully encourage more young families to relocate and live within city neighborhoods, the evolution of that tax base will be a progressive one, and will take some time. In the meantime, the city must more aggressively explore other areas of funding and cooperation.

1. Partnering with Onondaga County

   As described in the section on Metropolitan Cooperation, partnering with the County presents several opportunities for strengthening the City’s finances:

   • This partnership will adjust some of the out-dated formulas for sharing costs. In particular, the City guarantees the full amount of the school tax levy to the District. The County provides the same guarantee for the suburban school districts. Taxpayers who live in the City pay for both guarantees. The County should extend its guarantee to the City School District.
   • Secondly, the City has been paying the County for uncollected County taxes on vacant property when the City takes title to the property for unpaid property taxes after two years. This practice should be ended, and some adjustment should be made for prior years.

   As discussed in other areas of this policy compilation, strategic alliances with the County are important to the alleviation of some of the funding burden of the City. The Community Schools Initiative, discussed in the section on Education, will bring in new sources of funding for services delivered directly in our neighborhoods. And as the City and County cooperate to administer service delivery more efficiently, both governments can benefit from substantial reduction in costs and improvement in services.

   As Mayor, I will work to consolidate the databases managing the County’s income maintenance programs with the database supporting the City’s public housing programs. The cost of the County’s system ranges in millions of dollars. It is ineffective and inefficient. Much of the same data is maintained by other agencies. The new Metro-Net fiber optic link, which is being installed to connect all local governments, makes it possible to consider eliminating duplicated databases. Subject to program requirements and security considerations, a central database could be created to store the elements of common information that are now shared by separate agencies.

   For instance, when a family receiving Temporary Assistance to Needy Families (TANF) lives in public housing and their income changes, they are required to notify both County Social Services and the Syracuse Housing Authority. Both agencies enter information into separate computer systems and then send each other paper confirmations requiring additional processing. This is one small example of the duplication that could be eliminated. Costs can be reduced and services can be improved.

2. Strengthen the City’s grant management functions.

   Additionally, the City's Research Bureau, which oversees grant applications, must be modernized and made more accountable. Currently, there is no grant management information database that would allow for an analysis of grant application activity. It is not possible to determine whether the City is maximizing its opportunities for grant revenue. Installing grant management software to track grants throughout the City and the School District will be a priority of the Lewis Administration.

3. Create more effective alliances with non-governmental entities.

   The Lewis Administration will engage in more strategic alliances with private industry, the not-for-profit community, and the educational/medical/technical centers that are becoming a major factor in the advancement of the City regionally. It is necessary that government work in conjunction with these groups because they each offer services and value to the City that the City cannot replicate. Private industry can be more flexible in times of crisis and in terms of funding capital development. Our schools and research facilities can tap into funding for greater development of technical and research centers. Partnering with these groups will provide more effective programs for all involved and will allow for more concerted effort by all in the community for development and progress.

Transfer of Functions to the County

As described in the section on Metropolitan Cooperation, the City would save $3.5 million annually, should it transfer the responsibilities of purchasing services, Hancock Airport, and the downtown parking garages to the County. This $3.5 million savings could be invested in developing and strengthening City neighborhoods.